Combating Four Innovation Lies

Innovators have to deal with particularly insidious lies — things that people say that they believe are true, but actually aren't.

Lie #1: Target customer, "Of course I'll buy that."

Innovators working on new ideas often show early versions to customers to assess "purchase intent." But customers do a poor job of reporting what they'll do in the future, particularly if they're responding to a novel idea. One company that I worked with found that the accuracy of market forecasts for new-to-the-world ideas was roughly equivalent to using the results of a random number generator.

Instead, trust actions over statements. Don't look at what people say they will do. Look at what they are already doing. If they aren't spending money or time solving a problem today, they might not spend money or time to solve that problem tomorrow. Alternatively, consider a way to get a customer to pay for an early version of a product. My Harvard Business Review article with Procter & Gamble Chief Officer Bruce Brown, "How P&G Tripled Its Innovation Success Rate," describes how P&G uses "transaction learning experiments" to try to more accurately assess the demand of new-to-the-world ideas.

Lie #2: Product developer, "We'll be ready to ship in six months."

There's a great term in the psychology literature called the "planning fallacy." Basically, human beings are really terrible at estimating the amount of time or money it will take to accomplish a task, even when they have previous experience with the task. Product developers have every intention of finishing development on time, but invariably things take longer and cost more than people projected. There's one project I've been watching that has literally been three months away from shipping for 18 months now.

The easiest way to address this lie is to change the development paradigm. Borrow from the Agile software development movement and push for many rapid development cycles instead of a single long cycle. Don't try to put everything into the first release of a new offering, start with what Steve Blank calls a "Minimal Viable Product." That is, something that is just good enough to start the in-market testing process.

Lie #3: Salesperson, "Of course I can sell that."

While entrepreneurs have to scratch and claw to get resources, corporate innovators have access to all kinds of resources. Unfortunately, some of those resources end up not being quite as helpful as they first appear.

Consider a newspaper company we worked with a couple of years ago. They had an idea for a new online product. The sales force enthusiastically projected big sales. They conducted a three-month pilot to try to assess demand. Sales were low. No demand, right? Wrong. Deeper probing highlighted a different problem — the sales force had made a pitifully low number of sales calls during the pilot. The problem was the newspaper company asked its salespeople to sell a lower-priced product to a set of customers they didn't know. Predictably, once they got in the field the commission-based sales force prioritized making more money over making less money.

It's tempting to leverage an existing sales channel to push a new offering. After all, it's hard to build a sales channel from scratch. And it's rare that you will meet a salesperson who will claim that he can't successfully peddle a new product.

Start with a mental experiment to de-fang this lie. Ask yourself whether you are asking salespeople to make more money or less. People won't do what doesn't make sense to them. Then involve the sales channel in a controlled pilot to see what happens. Don't just watch the number of sales; look at the number of sales calls and the frequency with which the new offering is pitched.

Lie #4: Senior executives, "We're open to anything!"

One of the most important things that Harvard's Michael Porter has taught the world about strategy is that it's about making choices. Leaders often forget this lesson when they focus on innovation. If you push leaders to define what is on the table early in an innovation project, they often will think the right answer is to leave as many choices open as possible.

Not only is this not helpful (constraints can paradoxically encourage innovation), it isn't accurate. For example, a few years ago we were advising an innovation team inside a large healthcare company. The team was assessing an acquisition candidate that had a service-based business model, a sharp contrast from the company's product-centric model. Leaders kept telling the team they were open to anything . . . until it came time to pull the trigger on the acquisition, when it turned out that the executive team wasn't willing to move into services. Unfortunately, it took six months and untold meetings to learn that.

Find ways to test leaders' professed open-mindedness. Demand that executive sponsors take more things off the table than they leave on. Make an early budget request for an idea that you think might push the boundaries of their comfort zone, or propose a partnership with a company in a wildly different market segment. You'll quickly find out how much leeway you'll really have.

People who voice these four lies would easily pass a polygraph test. They sincerely believe them. You shouldn't. Instead, find clever ways to test customer demand, the feasibility of schedules, sales expectations, and your degree of freedom.

Thanks to Scott Anthony / Harvard Business Review
http://blogs.hbr.org/anthony/2011/06/combating_four_innovation_lies.html